EXHIBIT 99.1
FINANCIAL CONTACT: JAMES S. GULMI (615) 367-8325
MEDIA CONTACT: CLAIRE S. MCCALL (615) 367-8283
GENESCO REPORTS FOURTH QUARTER
AND FISCAL 2004 SALES AND EARNINGS
--COMPANY REPORTS FOURTH QUARTER DILUTED EARNINGS PER SHARE
BEFORE DISCONTINUED OPERATIONS OF $0.81--
NASHVILLE, Tenn., March 3, 2004 - Genesco Inc. (NYSE: GCO) today reported
earnings before discontinued operations of $17.8 million, or $0.81 per diluted
share, for the fourth quarter ended January 31, 2004. Items including retail
store asset impairments and recognition of excess restructuring provisions and a
tax benefit added a net $0.05 per diluted share to earnings before discontinued
operations in the fourth quarter of fiscal 2004. Earnings before discontinued
operations for the fourth quarter of fiscal 2003 were $14.2 million, or $0.56
per diluted share, including a charge of $0.06 per share primarily related to
retail store asset impairments. Net earnings for the fourth quarter of fiscal
2004 were $16.9 million, or $0.77 per diluted share, compared with $14.0
million, or $0.55 per diluted share, for the previous fourth quarter. Net sales
for the fourth quarter of fiscal 2004 were $253 million compared to $250 million
for the fourth quarter of fiscal 2003.
For the fiscal year ended January 31, 2004, earnings before
discontinued operations were $29.7 million, or $1.33 per diluted share, compared
to $36.4 million, or $1.47 per diluted share, for fiscal 2003. Earnings before
discontinued operations for fiscal 2004 included net charges of $0.03 per share,
primarily related to the items discussed above and expenses related to the
refinancing of the Company's long-term debt in the second quarter. Earnings
before discontinued operations for fiscal 2003 were reduced by $0.08 per share
because of charges primarily related to retail store asset impairments. Net
earnings for fiscal 2004 were $28.8 million, or $1.29 per
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diluted share, compared to $36.3 million, or $1.47 per diluted share, for fiscal
2003. Net sales for fiscal 2004 were $837 million versus $828 million the
previous year.
Genesco President and Chief Executive Officer Hal N. Pennington, said,
"We were very pleased to end the year on such a positive note. Throughout fiscal
2004 we worked hard to respond to challenges in the marketplace and we believe
that our strong fourth quarter performance is an early indication that our
strategies are working and our outlook is improving. As we head into fiscal
2005, our momentum is good, our inventories are fresh and we are excited about
the opportunities that lie ahead.
"During the quarter Journeys same store sales were flat, footwear unit
comparable sales rose 6% and margins came in above our expectations, due
primarily to lower than expected markdowns. So far in the new fiscal year,
Journeys' comparable sales trends have improved, the decline in average selling
price appears to be moderating, the retail environment seems to be improving and
Journeys merchants are enthusiastic about fresh, new products in the
marketplace. We believe that all of this bodes well for us in the new year.
"Comparable store sales in the fourth quarter in the Underground
Station/Jarman Group fell about 8%, compared to an increase of 9% last year,
with Underground Station stores again performing better than the Jarman stores.
As expected, the business was affected by a decline in demand for Euro-casual
and utility-inspired products. Underground Station has implemented a number of
initiatives to take advantage of the opportunities we see in its women's and
fashion athletic businesses and to improve its overall position in the
marketplace. Underground Station's comparable sales for the quarter to date have
improved from fourth quarter levels. We have made the strategic decision to
close 34 Jarman stores over the next 12 months and convert the remaining 62
stores to Underground Station stores as quickly as it is financially feasible to
do so, subject to obtaining necessary approvals under the store leases.
"Johnston & Murphy saw more benefits of its strategic repositioning in
the fourth quarter, as changes in product mix and a less promotional stance
improved average selling price in the Johnston & Murphy shops by 6% compared to
the fourth quarter last year. Johnston & Murphy also did a good job managing
expenses during the quarter and its inventories are well positioned
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as it begins the new year. The positive feedback from retailers that we received
at the recent World Shoe Association (WSA) tradeshow gives us confidence that
Johnston & Murphy is successfully executing its plan.
"Dockers Footwear sales were $12 million in the fourth quarter compared
to $19 million for the same period last year. Despite the top line pressure,
Dockers' operating margin increased by 2 percentage points. We continue to
expect a rebound in Dockers' sales in the second half of this year."
Genesco also stated that it is revising upward its fiscal 2005
guidance. The Company now expects sales between $901 million and $920 million
and earnings per share from $1.37 to $1.44, including charges of approximately
$0.09 per share associated with the planned closing of Jarman and other
underperforming stores in fiscal 2005. The Company's guidance does not reflect
the closing of its previously announced agreement to acquire Hat World
Corporation, which the Company expects to consummate during the first quarter.
Pennington concluded, "We remain committed to taking the necessary
steps to help improve our operating platform and better position Genesco for
long-term growth. We move forward focused on execution and excited about the
future."
This release contains forward-looking statements, including those
regarding the Company's sales and earnings outlook, the anticipated acquisition
of Hat World Corporation, and all other statements not addressing solely
historical facts or present conditions. Actual results could turn out materially
different from the expectations reflected in these statements. A number of
factors could cause differences. These include weakness in consumer demand for
products sold by the Company, fashion trends or other factors that affect the
sales or product margins of the Company's retail product offerings, changes in
buying patterns by significant wholesale customers, disruptions in product
supply or distribution, further unfavorable trends in foreign exchange rates and
other factors affecting the cost of products, changes in business strategies by
the Company's competitors, the Company's ability to open, staff and support
additional retail stores on schedule and at acceptable expense levels and to
renew leases in existing stores on schedule and at acceptable expense levels,
the ability to negotiate acceptable arrangements for closing or converting
Jarman stores, variations from expected pension-related charges caused by
conditions in the
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financial markets, and developments in litigation and environmental matters
involving the Company. They also include the Company's ability to consummate the
Hat World acquisition, including its ability to meet conditions to the
transaction and to conclude financing for it and to obtain required regulatory
approvals and the approval of Hat World's shareholders, and changes from
anticipated levels in interest rates associated with the financing for the
transaction and in the value of intangible assets to be acquired.
Forward-looking statements reflect the expectations of the Company at the time
they are made. The Company disclaims any obligation to update such statements.
The Company's live conference call on March 3, 2004, at 10:00 a.m.
(Central time) may be accessed through the Company's internet website,
www.genesco.com. The Company expects to discuss results from the fourth quarter
and fiscal year ended January 31, 2004, and its current expectations for the
fiscal year ending January 29, 2005, during the call. To listen live, please go
to the website at least 15 minutes early to register, download and install any
necessary software.
Genesco, based in Nashville, sells footwear and accessories in more
than 1,040 retail stores in the U.S., principally under the names Journeys,
Journeys Kidz, Johnston & Murphy, Jarman and Underground Station, and on
internet websites www.journeys.com and www.johnstonmurphy.com. The Company also
sells footwear at wholesale under its Johnston & Murphy brand and under the
licensed Dockers brand. Additional information on Genesco and its operating
divisions may be accessed at its website www.genesco.com.
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GENESCO INC.
CONSOLIDATED EARNINGS SUMMARY
Fourth Quarter Fiscal Year Ended
-------------- -----------------
In Thousands 2004 2003 2004 2003
- ------------ ---- ---- ---- ----
Net sales $ 252,672 $ 249,715 $ 837,379 $ 828,307
Cost of sales 134,603 133,477 448,601 438,231
Selling and administrative expenses 89,209 88,744 332,559 320,833
Restructuring and other charges 1,040 2,549 901 2,549
--------- --------- --------- ---------
Earnings from operations before interest and other 27,820 24,945 55,318 66,694
Loss on early retirement of debt - - 2,581 -
Interest expense, net 1,598 2,114 7,289 7,870
--------- --------- --------- ---------
EARNINGS BEFORE INCOME TAXES FROM
CONTINUING OPERATIONS 26,222 22,831 45,448 58,824
Income tax expense 8,392 8,658 15,760 22,379
--------- --------- --------- ---------
Earnings from continuing operations 17,830 14,173 29,688 36,445
Provision for discontinued operations, net (888) (165) (888) (165)
--------- --------- --------- ---------
NET EARNINGS $ 16,942 $ 14,008 $ 28,800 $ 36,280
========= ========= ========= =========
EARNINGS PER SHARE INFORMATION
Fourth Quarter Fiscal Year Ended
-------------- -----------------
In Thousands (except per share amounts) 2004 2003 2004 2003
- --------------------------------------- ---- ---- ---- ----
Preferred dividend requirements $ 73 $ 73 $ 294 $ 294
Average common shares - Basic EPS 21,721 21,710 21,742 21,821
Basic earnings per share:
Before discontinued operations $ 0.82 $ 0.65 $ 1.35 $ 1.66
Net earnings $ 0.78 $ 0.64 $ 1.31 $ 1.65
Average common and common
equivalent shares - Diluted EPS 22,098 26,988 22,042 27,152
Diluted earnings per share:
Before discontinued operations $ 0.81 $ 0.56 $ 1.33 $ 1.47
Net earnings $ 0.77 $ 0.55 $ 1.29 $ 1.47
GENESCO INC.
CONSOLIDATED EARNINGS SUMMARY
Fourth Quarter Fiscal Year Ended
-------------- -----------------
In Thousands 2004 2003 2004 2003
- ------------ ---- ---- ---- ----
Sales:
Journeys $ 151,128 $ 139,566 $ 468,919 $ 436,498
Underground Station/Jarman Group 47,521 48,129 147,812 147,926
Johnston & Murphy 41,727 43,000 160,095 165,269
Dockers 12,241 18,979 60,274 78,497
Corporate and Other 55 41 279 117
--------- --------- --------- ---------
NET SALES $ 252,672 $ 249,715 $ 837,379 $ 828,307
========= ========= ========= =========
Pretax Earnings (Loss):
Journeys $ 26,065 $ 22,050 $ 54,823 $ 53,214
Underground Station/Jarman Group 4,975 5,656 8,156 12,096
Johnston & Murphy 1,589 2,806 4,018 9,270
Dockers 943 1,089 4,548 8,506
Corporate and Other* (5,752) (6,656) (16,227) (16,392)
--------- --------- --------- ---------
Operating income 27,820 24,945 55,318 66,694
Loss on early retirement of debt - - 2,581 -
Interest, net 1,598 2,114 7,289 7,870
--------- --------- --------- ---------
TOTAL PRETAX EARNINGS 26,222 22,831 45,448 58,824
Income tax expense 8,392 8,658 15,760 22,379
--------- --------- --------- ---------
Earnings from continuing operations 17,830 14,173 29,688 36,445
Provision for discontinued operations (888) (165) (888) (165)
--------- --------- --------- ---------
NET EARNINGS $ 16,942 $ 14,008 $ 28,800 $ 36,280
========= ========= ========= =========
*Includes impairment charge of $2.8 million offset by $1.8 million excess
restructuring provisions in the fourth quarter and year of Fiscal 2004 and
includes impairment and other charges of $2.6 million in the fourth quarter
and year of Fiscal 2003 and $0.6 million of professional fees, severance and
litigation in Fiscal 2003.
GENESCO INC.
CONSOLIDATED BALANCE SHEET
JANUARY 31, FEBRUARY 1,
In Thousands 2004 2003
- ------------ ---- ----
ASSETS
Cash and cash equivalents $ 81,549 $ 55,929
Accounts receivable 12,515 19,412
Inventories 167,234 168,622
Other current assets 22,424 22,630
-------- --------
Total current assets 283,722 266,593
-------- --------
Property, equipment and capital leases 121,667 127,542
Other non-current assets 24,753 25,079
-------- --------
TOTAL ASSETS $430,142 $419,214
======== ========
LIABILITIES AND SHAREHOLDERS' EQUITY
Accounts payable $ 47,921 $ 43,660
Other current liabilities 44,405 44,606
-------- --------
Total current liabilities 92,326 88,266
-------- --------
Long-term debt 86,250 103,245
Other long-term liabilities 35,897 44,924
Shareholders' equity 215,669 182,779
-------- --------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $430,142 $419,214
======== ========
GENESCO INC.
RETAIL UNITS OPERATED - TWELVE MONTHS ENDED JANUARY 31, 2004
BALANCE BALANCE
02/01/03 OPEN CONVERSIONS CLOSE 01/31/04
-------- ---- ----------- ----- --------
Journeys Group 614 55 0 4 665
Journeys 579 50 0 4 625
Journeys Kidz 35 5 0 0 40
Underground Station/Jarman Group 229 18 0 14 233
Underground Station 114 18 8 3 137
Jarman Retail 115 0 (8) 11 96
Johnston & Murphy 148 7 0 7 148
Shops 115 5 0 5 115
Factory Outlets 33 2 0 2 33
--- -- -- -- -----
Total Retail Units 991 80 0 25 1,046
=== == == == =====
RETAIL UNITS OPERATED - THREE MONTHS ENDED JANUARY 31, 2004
BALANCE BALANCE
11/01/03 OPEN CONVERSIONS CLOSE 01/31/04
-------- ---- ----------- ----- --------
Journeys Group 658 8 0 1 665
Journeys 618 8 0 1 625
Journeys Kidz 40 0 0 0 40
Underground Station/Jarman Group 237 4 0 8 233
Underground Station 132 4 2 1 137
Jarman Retail 105 0 (2) 7 96
Johnston & Murphy 152 2 0 6 148
Shops 118 2 0 5 115
Factory Outlets 34 0 0 1 33
----- -- --- -- -----
Total Retail Units 1,047 14 0 15 1,046
===== == === == =====
CONSTANT STORE SALES
Three Months Ended Twelve Months Ended
------------------ -------------------
JANUARY 31, February 1, JANUARY 31, February 1,
2004 2003 2004 2003
---- ---- ---- ----
Journeys 0% 1% -1% 0%
Underground Station/Jarman Group -8% 9% -6% 14%
Underground Station -7% 17% -1% 18%
Jarman Retail -9% 3% -11% 12%
Johnston & Murphy -1% -3% -1% 0%
Shops -3% -2% -3% 0%
Factory Outlets 9% -7% 4% -1%
-- -- -- --
Total Constant Store Sales -2% 2% -2% 3%
== == == ==